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A study of the growth-investment-financing nexus of the major UK construction groups

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  • Anita Punwani

Abstract

This paper compares the relationship between growth, investment and financing of the contracting operations with that of the housebuilding operations in the large, diversified UK construction groups during the 1980s. A graphical presentation of a financial analysis of the contracting and housebuilding divisions' company accounts illustrates significant changes in the levels of capital investment and the sources and uses of finance of these two activities during a period of marked growth in turnover. It is established that the major contractors not only achieved significant growth in their turnover with negligible recourse to additional capital investment but in fact generated surplus funds which could be diverted into other businesses in their respective construction group's portfolio of business activities. It is shown that their 'cash-requiring' speculative housebuilding businesses relied on such intra-group funds as a main source of finance for investment in land during the 1980s.

Suggested Citation

  • Anita Punwani, 1997. "A study of the growth-investment-financing nexus of the major UK construction groups," Construction Management and Economics, Taylor & Francis Journals, vol. 15(4), pages 349-361.
    • Handle: RePEc:taf:conmgt:v:15:y:1997:i:4:p:349-361
    DOI: 10.1080/014461997372908
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    References listed on IDEAS

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    1. Robin Marris & Adrian Wood (ed.), 1971. "The Corporate Economy," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-01110-0, October.
    2. Patricia Hillebrandt & Jacqueline Cannon, 1990. "The Modern Construction Firm," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-13628-5, October.
    3. William Ramsay, 1989. "Business Objectives and Strategy," Palgrave Macmillan Books, in: Patricia M. Hillebrandt & Jacqueline Cannon (ed.), The Management of Construction Firms, chapter 2, pages 9-30, Palgrave Macmillan.
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    Cited by:

    1. Chan Swee Lean, 2001. "Empirical tests to discern linkages between construction and other economic sectors in Singapore," Construction Management and Economics, Taylor & Francis Journals, vol. 19(4), pages 355-363.

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